Wholesale lenders will use a mortgage broker who sells loans in the secondary market. It’s almost like buying clothes from a second hand store while wholesaling a loan is like buying a second hand loan. These loans are still as good as an original loan, and most of the time, exactly the same. Retail or direct lenders will contact and use loan officers in retail branches to obtain new customers and complete the loans. The wholesale lender will then fund the loans acquired through the mortgage broker who works outside of the company. For the most part, companies who have a large commercial division still have a wholesale division as well. However, the smaller lending companies do not have a wholesale department. Most wholesale work is done independently through private organizations.
There are many benefits to working with a wholesale mortgage lender when getting a loan. For example, it is easier for the lender to lower the interest rates on the loan. A good company to work with is Yield Spread Premium.
Mortgage brokers will receive compensation from lenders and will be paid by the wholesaler to keep potential buyers from paying higher processing fees. When selling a loan second hand, the profit will be higher. This can be beneficial for the potential home buyer because it could mean less risk and more opportunity to lower the interest rates.
The benefits of working with an independent mortgage broker are wonderful. Instead of working with a bank, a mortgage broker will work one on one with the potential home buyer for a more customized and personalized home buying experience. In customizing the potential home buyer’s loan, the mortgage broker will examine every aspect of the potential home buyer’s financial situation to decide which loan will benefit them.
There are many benefits to working upfront with mortgage brokers. An upfront mortgage broker receives a fixed rate on each mortgage sold. The potential home buyer can have peace of mind that there will not be any hidden fees in the lender's cost.